Publicly funded academies and free schools offer new opportunities for the construction sector. But make sure you know who the decision makers are

Peter Hill

Over 3,000 academies and over 170 free schools are open as of September 2013. Around 130 further academies are in the pipeline, as are some 250
or more free schools with opening dates staggered over the year to September 2014.

Both are state-funded independent (rather than local authority maintained) schools, but as free schools are set up from scratch, the start-up process can take up to 18 months. This is much longer than the four months or so needed for conversion of an existing maintained school.

When a free school is approved by the Department for Education, it has the opportunity to identify its preferred site. Funding for acquisition of the site and any alterations or works necessary before opening is in the hands of the Education Funding Agency (EFA).

In contrast to the requirements of a completely new school, the process of conversion to academy status does not generate construction work. However, it does shift responsibility for maintenance of the premises. Like maintained schools, academies have only limited control over the maintenance spend through the allocation of devolved formula capital. This funding is intended to cover only priority building repairs and information and computing technology. For 2013/14, devolved formula capital funding for both maintained schools and academies will bearound £200m, only a small proportion of the total maintenance funding for the year of around £1.5bn.

Designers, contractors and developers must be clear who their client is

Decisions on capital maintenance, in effect all significant building element replacements such as roofs, boilers and windows, will be made by the EFA on behalf of the DfE. In reality, EFA’s decision-making will cover local authority maintained schools, academies and free schools.

Data gathering for the nationwide schools condition survey, initiated in response to the sharp criticisms made by the James Review in 2011, is now complete and the results are being digested. EFA’s conclusions about maintenance priorities should emerge soon and be translated into a series of targeted programme frameworks.
We should expect that EFA will give close attention to features which will ensure value for money such as sufficient volumes to achieve significant trade discounts.
Designers, contractors and developers must be clear who their client is, and whose decision is needed for a particular project. The identity of the employer should be clear on the face of the tender documents.

Where this is an academy or free school, the Academies Act 2010 requires the academy trust to be set up as a company limited by guarantee. This is a long-established legal form in common use for charities and not-for-profit organisations, and as a limited liability company, is required under the Companies Act 2006 to be registered at the Companies Registry. The name “free school” is not used in the legislation, and for legal purposes, a free school is an academy under the Academies Act 2010.

Decisions by academies (including free schools) are taken by the board of governors, who are also company directors and charity trustees. These triple functions correspond to those of their counterparts in fee-paying independent schools. In addition, as publicly funded bodies, academies and free schools must follow competitive contract award procedures.

Where the contract value is above the EU threshold, the procedure must comply with the Public Contracts Regulations 2006. In practice, award of a contract for a single academy or free school is unlikely to exceed the threshold value, but academy chains, which are growing rapidly) will procure for all the academy schools in their chain.
The largest chains may have 40 or more academy schools. There are many small academy chains of two-to-five schools, but not all of these have ambitions for growth and some have chosen alternative forms of collaboration.

Any academy may collaborate with other academies either for educational objectives or to procure support services, such as facilities management. This may be a contractual arrangement
(a collaboration agreement) or through a corporate vehicle (an umbrella academy trust).

An umbrella trust will be registered as a separate company and is funded by each of the participating academies allocating a portion of their budget to it.

Peter Hill is a senior associate in TPP Law’s property practice